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1.1 Introduction To Service Marketing

1. Services make up a large and growing portion of the world's economies, contributing over half of global GDP and employment. 2. Key characteristics of services include intangibility, perishability, and heterogeneity in quality and delivery due to the involvement of people. These characteristics present unique challenges for marketing services. 3. In India, the services sector contributes over half of GDP and employment and is the largest recipient of foreign direct investment. Major segments include IT, trade, education, media, hospitality, and healthcare.

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Rashmi Anand
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66 views

1.1 Introduction To Service Marketing

1. Services make up a large and growing portion of the world's economies, contributing over half of global GDP and employment. 2. Key characteristics of services include intangibility, perishability, and heterogeneity in quality and delivery due to the involvement of people. These characteristics present unique challenges for marketing services. 3. In India, the services sector contributes over half of GDP and employment and is the largest recipient of foreign direct investment. Major segments include IT, trade, education, media, hospitality, and healthcare.

Uploaded by

Rashmi Anand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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1.

1 Introduction to Services
Marketing
Dr Tanvi Gupta
Services Defined
Services are deeds, processes and performances
provided or conducted by one entity or person for
another entity or person.
All economic activities whose output is not a
physical product or construction, is generally
consumed at the time it is produced and provides
added value in forms (such as convenience,
amusement, timeliness, comfort or health) that are
intangible concerns of its first purchase (Zeithaml)
Service categories

Service industries-core product service

Service as products

Customer service- in support of core product &


not charged

Derived Services-
Role in World Economies
Service sector -most dynamic sector of world economy , contributing

1/3rd of GVA ($74 trillion in 2014) 1/5th of Global trade


1/2 of world employment (35.9% in 2001 to 50.9 % -S2015)
- More than half of F D I
(Global FDI flow increased by 36% in 2015 to estimated $ 1.7 trillion
USA
GDP – 54% in 1948-49 -- 81 % in 2016;
Employment 54% (1950) -- 80% (2014)
Service as % of GDP( 2015)-
Maximum- Hongkong -93% UK- 80 %;
Japan- 72 % China- 48 % India 54%
Indian Scenario
Since independence ,Share of services in terms of GDP &
Employment is increasing
Contribution of Services to India’s GDP ( 2016-17)-
Services-53.77 %; Industry-31.1 %; Agriculture- 15.1 % as
against 30.3%; 16.6 % and 53% respectively in 1950-51
Share by working force
Primary (51%)> Tertiary (34%) > Secondary (15%)>
CSO estimate GVA in 2016-17 grew to Rs 21.43 Trillion (
332 billion $ , growth rate 7.74 %
FDI inflow during 2016- 17 was 59.47 billion $ or 17.2 % of
foreign inflow (Dept of Foreign Policy & Promotion )
Segments of Service Sector in India
• Information Technology
•Trade •Education •Media
•Hospitality, accommodation and food services
•Entertainment •Transport and warehousing
•Storage •Communication
•Health care and social assistance •Tourism
• public utilities •Real estate and leasing
•Business support services
•Professional , scientific and technical services
REASONS FOR GROWTH OF SERVICE
SECTOR in India

1 Increasing affluence(wealth)-disposable personal


income 6.01 mill in2010, 7.16 mill 2011
-More people short of time ,
- Increased desire for buying experiences vs. things ,
-Rising consumer ownership of high tech equipment
-Easier access to information
2 More companies operating on transnational basis -
-Increased international travel ,
-International mergers and alliances ,
-“Offshoring” of customer service ,
-Foreign competitors invade domestic markets
REASONS FOR GROWTH OF
SERVICE SECTOR in India
3 More leisure(free time) time - senior citizens
4 Greater life expectancy
5 Greater complexity of the product
6 Higher percentage of working women
7 Increasing number of new products
8 Increasing Specialisation-
-technology,
-experts services,
-Growth of Internet , cont.
REASONS FOR GROWTH OF SERVICE
SECTOR in India

-Greater bandwidth,
-Compact mobile equipment ,
-Wireless networking,
-Faster, more powerful software,
-Digitization of text, graphics, audio, video
Why Service Marketing
1 Service based economies-role in GDP, employment,
FDI;
2 Service as business imperative – potential for service
led growth- e.g. Xerox provide documentation
management services(digital and paper) apart from
repair and maintenance services;
P&G –push into services- tied to its well known brands-
Mr. Clean Car Wash-a franchise model for Tide Dry
Cleaners; Tide Spine laundry service
3 Deregulated Industries & Professional service needs
Why Service Marketing
4 S marketing is different- -need for new approach
a More variables in marketing mix of services-physical
evidence, people, process
b Marketing & operations are more closely related in case of
service marketing
c Direct dialogue with customers
d Common marketing variables have different implications
- Pricing most critical factor in S M
-Distribution- cannot rely on well stocked shelf
- Benefits of using sales promotion methods not as good as
in goods marketing Service equal profit- HBR case-Service
Profit Chain-linking internal service & employee satisfaction to
customer value & profit
Characteristics of Services
Compared to Goods
1 Intangibility: Can not feel or touch ; Difficult to
comprehend utility or understand or evaluate; measure
quality or consistency;
No concept of ownership, only experience ; customer
become price sensitive
IMPLICATION : Services cannot be
-inventoried; easily patented ;
- readily displayed or communicated
-Pricing is difficult
Task- Emphasize physical clues, employ metaphors and
vivid images in advertising
Characteristics of Services
Compared to Goods
2 Perishability : can not be stored; forces
simultaneous production and consumption;
transaction not taking place means loss of
revenue;
IMPLICATION -It is difficult to synchronize
supply and demand with services ;
Services cannot be returned or resold
Characteristics of Services
Compared to Goods
3 Heterogeneity: Service offer is never consistent in
quality and delivery; non standardization; Different
branches/Employees of same branch Skills
/background / moods of people
IMPLICATION- Service delivery and customer
satisfaction depend on employee and customer
actions
-Service quality depends on many uncontrollable
factors
-There is no sure knowledge that the service delivered
matches what was planned and promoted
Characteristics of Services
Compared to Goods
Services
Theodore Levitt -There are no such things as
service industries There are only service industries
whose service components are greater or less than
those of other industries Two types
– Search goods- packaged goods can see evaluate
– Experienced goods-can evaluate after purchase only
Kotler-Four categories-i) Pure tangible ii)Major tangible
iii) Minor tangible iv) Pure Services
Tangibility Spectrum : Breaking free from Product
Marketing, JM , (Shostack)
Tangibility Spectrum
• Services cannot be inventoried

• Services cannot be easily patented

• Services cannot be readily displayed or


communicated

• Pricing is difficult
Challenges for Services
a) Defining and improving quality
b) Ensuring the delivery of consistent quality
c) Designing and testing new services
d) Communicating and maintaining a
consistent image
e) Accommodating fluctuating demand
f) Motivating and sustaining employee
commitment
Challenges for Services
g) Coordinating marketing, operations, and
human resource efforts
h) Setting prices
I) Finding a balance between standardization
versus customization
J) Developing trust of prospect- sells on basis of
trust –e.g. insurance-co will deliver;
k) Increased competition
l) Differentiation

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